Question
The accounts of Long Company provided the following 20X5 information at 31 December 20X5 (end of the annual period): Accounts receivable balance, 1 January 20X5
The accounts of Long Company provided the following 20X5 information at 31 December 20X5 (end of the annual period):
Accounts receivable balance, 1 January 20X5 | $ | 58,000 | ||
Allowance for doubtful accounts balance, 1 January 20X5 | 4,400 | |||
Uncollectible account to be written off during 20X5 (ex-customer Slo) | 1,700 | |||
Cash collected on accounts receivable during 20X5 | 177,000 | |||
Estimates for bad debt losses:
Based on ending balance of accounts receivable, 8%.
Based on aging schedule (excludes Slos account):
Age | Accounts Receivable | Probability of Noncollection | ||||
Less than 30 days | $ | 30,800 | 2 | % | ||
3190 days | 9,800 | 10 | ||||
91120 days | 5,800 | 30 | ||||
More than 120 days | 4,800 | 60 | ||||
Required:
1. Give the entry to write off customer Slos long-overdue account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Record the write off of customer Slos long-overdue account.
2. Give all entries related to accounts receivable and the allowance account for the following two cases: (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Case ABad debt expense is based on the ending balance of accounts receivable
Case BBad debt expense is based on aging
3. Show how the results of applying each case above should be reported in 20X5 earnings and on the 20X5 statement of financial position.
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